10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-39114

 

Galera Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

46-1454898

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2 W. Liberty Blvd #100

Malvern, Pennsylvania

19355

(Address of principal executive offices)

(Zip Code)

 

(610) 725-1500

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock,

$0.001 par value per share

GRTX

The Nasdaq Stock Market LLC (Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 7, 2022, the registrant had 28,500,066 shares of common stock, $0.001 par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Consolidated Balance Sheets

1

 

Consolidated Statements of Operations

2

 

Consolidated Statements of Comprehensive Loss

3

 

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

4

 

Consolidated Statements of Cash Flows

5

 

Notes to Unaudited Interim Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

Signatures

31

 

 

 

i


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our plans to develop and commercialize our product candidates, the timing of our ongoing or planned clinical trials, the timing of and our ability to obtain and maintain regulatory approvals, the clinical utility of our product candidates, our commercialization, manufacturing capabilities and strategy, our expectations about the willingness of healthcare professionals to use our product candidates, the sufficiency of our cash, cash equivalents and short-term investments and our ability to raise additional capital to fund our operations, our plans to mitigate the risk that we are unable to continue as a going concern, the anticipated impact of the COVID-19 pandemic and general economic conditions on our business, and the plans and objectives of management for future operations, capital needs, and capital expenditures are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements, including, but not limited to, the following: our limited operating history; anticipating continued losses for the foreseeable future; substantial doubt regarding our ability to continue as a going concern; needing substantial funding and the ability to raise capital; our dependence on avasopasem manganese (GC4419) and our other product candidates; uncertainties inherent in the conduct of clinical trials; difficulties or delays enrolling patients in clinical trials; the FDA’s acceptance of data from clinical trials outside the United States; undesirable side effects from our product candidates; risks relating to the regulatory approval process; failure to capitalize on more profitable product candidates or indications; ability to receive and/or maintain Breakthrough Therapy Designation or Fast Track Designation for product candidates; failure to obtain regulatory approval of product candidates in the United States or other jurisdictions; ongoing regulatory obligations and continued regulatory review; risks related to commercialization; risks related to competition; ability to retain key employees and manage growth; risks related to intellectual property; inability to maintain collaborations or the failure of these collaborations; our reliance on third parties; the possibility of system failures or security breaches; liability related to the privacy of health information obtained from clinical trials and product liability lawsuits; unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives; environmental, health and safety laws and regulations; the impact of the COVID-19 pandemic on our business and operations, including preclinical studies and clinical trials, and general economic conditions; risks related to ownership of our common stock; significant costs as a result of operating as a public company; Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions; and those described under the sections in our Annual Report on Form 10-K for the year ended December 31, 2021 and this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

ii


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

GALERA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

(unaudited)

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,730

 

 

$

19,859

 

Short-term investments

 

 

30,039

 

 

 

51,358

 

Restricted cash

 

 

50

 

 

 

 

Prepaid expenses and other current assets

 

 

2,098

 

 

 

6,175

 

Total current assets

 

 

44,917

 

 

 

77,392

 

Property and equipment, net

 

 

464

 

 

 

527

 

Acquired intangible asset

 

 

2,258

 

 

 

2,258

 

Goodwill

 

 

881

 

 

 

881

 

Right-of-use lease assets

 

 

106

 

 

 

296

 

Other assets

 

 

2,087

 

 

 

1,957

 

Total assets

 

$

50,713

 

 

$

83,311

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,591

 

 

$

5,044

 

Accrued expenses

 

 

7,932

 

 

 

7,633

 

Lease liabilities

 

 

109

 

 

 

258

 

Total current liabilities

 

 

11,632

 

 

 

12,935

 

Royalty purchase liability

 

 

136,310

 

 

 

128,063

 

Lease liabilities, net of current portion

 

 

 

 

 

44

 

Deferred tax liability

 

 

273

 

 

 

273

 

Total liabilities

 

 

148,215

 

 

 

141,315

 

Stockholders’ deficit:

 

 

 

 

 

 

Preferred stock, $0.001 par value: 10,000,000 shares authorized; no shares
   issued and outstanding.

 

 

 

 

 

 

Common stock, $0.001 par value: 200,000,000 shares authorized;
  
26,831,589 and 26,458,767 shares issued and outstanding at
   September 30, 2022 and December 31, 2021, respectively

 

 

27

 

 

 

26

 

Additional paid-in capital

 

 

264,700

 

 

 

258,086

 

Accumulated other comprehensive loss

 

 

(93

)

 

 

(14

)

Accumulated deficit

 

 

(362,136

)

 

 

(316,102

)

Total stockholders’ deficit

 

 

(97,502

)

 

 

(58,004

)

Total liabilities and stockholders’ deficit

 

$

50,713

 

 

$

83,311

 

 

See accompanying notes to unaudited interim consolidated financial statements.

1


 

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

(unaudited)

 

 

 

Three months ended
September 30,

 

 

Nine months ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

8,106

 

 

$

14,813

 

 

$

22,875

 

 

$

43,203

 

General and administrative

 

 

4,853

 

 

 

5,487

 

 

 

15,193

 

 

 

15,667

 

Loss from operations

 

 

(12,959

)

 

 

(20,300

)

 

 

(38,068

)

 

 

(58,870

)

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

171

 

 

 

3

 

 

 

256

 

 

 

28

 

Interest expense

 

 

(3,245

)

 

 

(2,327

)

 

 

(8,247

)

 

 

(4,882

)

Gain on disposal of assets

 

 

1

 

 

 

 

 

 

27

 

 

 

 

Foreign currency loss

 

 

(1

)

 

 

(2

)

 

 

(2

)

 

 

(3

)

Net loss

 

$

(16,033

)

 

$

(22,626

)

 

$

(46,034

)

 

$

(63,727

)

Net loss per share of common stock, basic and diluted

 

$

(0.60

)

 

$

(0.86

)

 

$

(1.72

)

 

$

(2.49

)

Weighted-average shares of common stock outstanding, basic and diluted

 

 

26,823,546

 

 

 

26,304,920

 

 

 

26,798,348

 

 

 

25,569,545

 

 

See accompanying notes to unaudited interim consolidated financial statements.

2


 

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(IN THOUSANDS)

(unaudited)

 

 

 

Three months ended
September 30,

 

 

Nine months ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(16,033

)

 

$

(22,626

)

 

$

(46,034

)

 

$

(63,727

)

Unrealized gain (loss) on short-term investments

 

 

17

 

 

 

(5

)

 

 

(79

)

 

 

(14

)

Comprehensive loss

 

$

(16,016

)

 

$

(22,631

)

 

$

(46,113

)

 

$

(63,741

)

 

See accompanying notes to unaudited interim consolidated financial statements.

3


 

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(IN THOUSANDS EXCEPT SHARE AMOUNTS)

(unaudited)

 

 

 

Common stock

 

 

Additional
paid-in

 

 

Accumulated
other
comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

Deficit

 

 

Deficit

 

 Balance at January 1, 2022

 

 

26,458,767

 

 

$

26

 

 

$

258,086

 

 

$

(14

)

 

$

(316,102

)

 

$

(58,004

)

 Share-based compensation expense

 

 

 

 

 

 

 

 

1,848

 

 

 

 

 

 

 

 

 

1,848

 

 Exercise of stock options

 

 

46,358

 

 

 

 

 

 

58

 

 

 

 

 

 

 

 

 

58

 

 Sale of shares under Open Market Sale
 Agreement, net

 

 

314,296

 

 

 

1

 

 

 

1,116

 

 

 

 

 

 

 

 

 

1,117

 

 Unrealized loss on short-term
   investments

 

 

 

 

 

 

 

 

 

 

 

(47

)

 

 

 

 

 

(47

)

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,443

)

 

 

(15,443

)

 Balance at March 31, 2022

 

 

26,819,421

 

 

 

27

 

 

 

261,108

 

 

 

(61

)

 

 

(331,545

)

 

 

(70,471

)

 Share-based compensation expense

 

 

 

 

 

 

 

 

1,830

 

 

 

 

 

 

 

 

 

1,830

 

 Exercise of stock options

 

 

2,168

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

 Unrealized loss on short-term
   investments

 

 

 

 

 

 

 

 

 

 

 

(49

)

 

 

 

 

 

(49

)

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,558

)

 

 

(14,558

)

 Balance at June 30, 2022

 

 

26,821,589

 

 

 

27

 

 

 

262,940

 

 

 

(110

)

 

 

(346,103

)

 

 

(83,246

)

 Share-based compensation expense

 

 

 

 

 

 

 

 

1,750

 

 

 

 

 

 

 

 

 

1,750

 

 Exercise of stock options

 

 

10,000

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

10

 

 Unrealized gain on short-term
   investments

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

17

 

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,033

)

 

 

(16,033

)

 Balance at September 30, 2022

 

 

26,831,589

 

 

$

27

 

 

$

264,700

 

 

$

(93

)

 

$

(362,136

)

 

$

(97,502

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

Additional
paid-in

 

 

Accumulated
other
comprehensive

 

 

Accumulated

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

Deficit

 

 

(Deficit)

 

 Balance at January 1, 2021

 

 

24,976,142

 

 

$

25

 

 

$

241,649

 

 

$

12

 

 

$

(235,568

)

 

$

6,118

 

 Share-based compensation expense

 

 

 

 

 

 

 

 

1,791

 

 

 

 

 

 

 

 

 

1,791

 

 Exercise of stock options

 

 

217,015

 

 

 

 

 

 

235

 

 

 

 

 

 

 

 

 

235

 

 Unrealized loss on short-term
   investments

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,715

)

 

 

(18,715

)

 Balance at March 31, 2021

 

 

25,193,157

 

 

 

25

 

 

 

243,675

 

 

 

10

 

 

 

(254,283

)

 

 

(10,573

)

 Share-based compensation expense

 

 

 

 

 

 

 

 

1,611

 

 

 

 

 

 

 

 

 

1,611

 

 Exercise of stock options

 

 

60,975

 

 

 

 

 

 

120

 

 

 

 

 

 

 

 

 

120

 

 Sale of shares under Open Market Sale
 Agreement, net

 

 

665,279

 

 

 

1

 

 

 

5,717

 

 

 

 

 

 

 

 

 

5,718

 

 Unrealized loss on short-term
   investments

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

(7

)

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,386

)

 

 

(22,386

)

 Balance at June 30, 2021

 

 

25,919,411

 

 

 

26

 

 

 

251,123

 

 

 

3

 

 

 

(276,669

)

 

 

(25,517

)

 Share-based compensation expense

 

 

 

 

 

 

 

 

1,870

 

 

 

 

 

 

 

 

 

1,870

 

 Exercise of stock options

 

 

293,267

 

 

 

 

 

 

890

 

 

 

 

 

 

 

 

 

890

 

 Sale of shares under Open Market Sale
 Agreement, net

 

 

226,089

 

 

 

 

 

 

2,221

 

 

 

 

 

 

 

 

 

2,221

 

 Unrealized loss on short-term
   investments

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,626

)

 

 

(22,626

)

 Balance at September 30, 2021

 

 

26,438,767

 

 

$

26

 

 

$

256,104

 

 

$

(2

)

 

$

(299,295

)

 

$

(43,167

)

 

See accompanying notes to unaudited interim consolidated financial statements.

4


 

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(unaudited)

 

 

 

Nine months ended
September 30,

 

 

 

2022

 

 

2021

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(46,034

)

 

$

(63,727

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

88

 

 

 

314

 

Noncash interest expense

 

 

8,247

 

 

 

4,882

 

Share-based compensation expense

 

 

5,428

 

 

 

5,272

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

4,077

 

 

 

1,171

 

Other assets

 

 

60

 

 

 

7

 

Accounts payable